At lunchtime one day last January, Jill Hein, an Iowa mother of
eight, took a jar of Peter Pan peanut butter—the kind
with Peter, in his feathered cap, on the label—out of her
pantry. She opened the lid. Everything seemed fine. No funny
odor. No odd color.

Hein fed the Peter Pan to one son and one daughter. Within
hours, they were cramping and vomiting. Hein’s
3-year-old boy, Bowen, had to be taken to the emergency
room the next day. Hein ate some herself two weeks later and
was hospitalized for dehydration. And renal failure.

Alone or with jelly, peanut butter is as classic as Elvis,
who preferred his on white bread, mashed with bananas and
fried. Americans eat 700 million pounds of crunchy and creamy
each year—enough, the Peanut Advisory Board says, to coat
the floor of the Grand Canyon.

One of ConAgra’s oldest and best-known brands, Peter
Pan brought in $109 million in sales last year, says
Information Resources, which tracks retail spending. ConAgra
also supplies some of Wal-Mart’s Great Value house brand
and sells peanut butter toppings to companies like Carvel and
Sonic, bringing total peanut butter sales to $147 million last
year. But when an outbreak of a rare salmonella strain was
traced to ConAgra peanut butter, the company would have to try
to get it all back.

The Peter Pan recall eventually involved 326 million pounds
of its own and Wal-Mart’s peanut butter, plus 99,953
cases of toppings. So far, ConAgra has spent more than $78
million dealing with an estimated $1 billion worth of
potentially infected product. Its peanut butter sales were down
63 percent in fiscal 2007, the company says.

No one knows how much ConAgra will need to spend to
re-establish trust in its product. Hiring Tinker Bell to ask
people to clap if they believe in Peter Pan won’t fix
this.

Why Recalls Depend on the Supply Chain

Peanut butter isn’t ConAgra’s only recall
trouble, either. The company has had to call back hundreds of
pounds of ground beef in the past few years, and this month
ConAgra’s Banquet pot pies were recalled when at least
211 people in the U.S. got salmonella poisoning, which the
Centers for Disease Control and Prevention links to the pot
pies. That recall is ongoing.

But it’s not just ConAgra. Recalls are blooming like
flowers in spring: Dole’s e.coli bagged salads; Metz
Fresh’s salmonella spinach; REI’s faulty
children’s bikes; Mattel’s lead-painted and
choking-hazard toys, just to name a few. Federal records show
at least 628 recalls so far this year, and another
941 in 2006. (For more, check our History of Famous Recalls.)
Globalization accounts for some of this surge. Many U.S.
companies depend on overseas production, where quality controls
are difficult to monitor. And it’s not just hard goods
like toys from China. Food, too, arrives by container ship from
other countries, and sometimes it’s contaminated. So far
this year, for example, more than 8,660 cartons of cantaloupe
from Costa Rica have been recalled for salmonella risks,
according to U.S. Food and Drug Administration (FDA)
records.

But mainly, things go wrong. That’s business.
That’s life.

“One risk every company faces is a recall,” says
Jane Barrett, an analyst at AMR Research in Boston. So if
recalls are inevitable, a CIO must help create a supply chain
ready to cope with them, she says, by quickly providing the
relevant data to facilitate the process. And a recall conducted
under pressure from federal regulators, an angry public and
plaintiff’s lawyers tests every supply chain management
decision a CIO makes.